Sec. 307. Incentives to reduce tobacco use

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Not later than August 31, 2014, and annually thereafter, the Secretary of Health and Human Services (referred to in this section as the Secretary ) shall publish the results of an annual tobacco use survey, to be carried out not later than 18 months after the date of enactment of this Act and completed on an annual basis thereafter, to determine— the percentage of all young individuals who used tobacco products within the 30-day period prior to the conduct of the survey involved; and the percentage of young individuals who identify each brand of each type of tobacco product as the usual brand used within such 30-day period.

For the purposes of this section, the term young individuals means individuals who are under 18 years of age. The survey referred to in paragraph

(1)may be the National Survey on Drug Use and Health or shall at least be comparable in size and methodology to the NSDUH that was completed in 2009 to measure the use of cigarettes (by brand) by youths under 18 years of age within the 30-day period prior to the conduct of the study. Such survey may be conducted as a component of the National Health and Nutrition Examination Survey or the National Health Interview Survey, if all other requirements provided for in this section are complied with. A survey using the methodology described in subparagraph

(A)shall be deemed conclusively proper, correct, and accurate for purposes of this section. In this section, the term National Survey on Drug Use and Health or NSDUH means the annual nationwide survey of randomly selected individuals, aged 12 and older, conducted by the Substance Abuse and Mental Health Services Administration. The Secretary, based on a comparison of the results of the first annual tobacco product survey referred to in paragraph

(1)and the most recent survey data referred to in paragraph (2)(A) completed prior to the date of enactment of this Act, shall determine the percentage reduction (if any) in youth tobacco use for each manufacturer of tobacco products. Notwithstanding any other provision of law, the Secretary may conduct a survey under this subsection involving minors if the results of such survey with respect to such minors are kept confidential and not disclosed. Chapter 35 of title 44, United States Code, shall not apply to information required for the purposes of carrying out this section. It shall be the tobacco use reduction goal that youth tobacco use be reduced by at least 5 percent or a level determined significantly sufficient by the Secretary between the most recent NSDUH referred to in subsection (a)(2)(A) and the completion of the first annual cigarette survey (and such subsequent surveys as compared to the previous year's survey) referred to in subsection (a)(1). If the Secretary determines that the tobacco use reduction goal under paragraph

(1)has not been achieved, the Secretary shall, not later than September 10, 2014, and September 10 of each year thereafter, impose an industry-wide penalty on the manufacturers of cigarettes in an amount that is in the aggregate equal to $3,000,000,000. The industry-wide penalty imposed under this subsection shall be paid by each manufacturer based on the brand share among youth ages 12–17 (as determined by the survey described in subsection (a)(1)) as such percentage relates to the total amount to be paid by all manufacturers. The determination of the Secretary as to the amount and allocation of a surcharge under this section shall be final and the manufacturer shall pay such surcharge within 10 days of the date on which the manufacturer is assessed. Such payment shall be retained by the Secretary pending final judicial review of what, if any, change in the surcharge is appropriate. With respect to cigarettes, a manufacturer with a market share of 1 percent or less of youth tobacco use shall not be liable for the payment of a surcharge under this paragraph. Amounts collected under subparagraph

(A)shall be deposited into the Prevention and Public Health Fund established under section 4002 of the Patient Protection and Affordable Care Act ( 42 U.S.C. 300u–11 ). Such funds shall remain available for transfer through September 30th of the fifth fiscal year following their collection, subject to the terms and conditions of such section 4002. The payment of penalties under this section shall not be considered to be an ordinary and necessary expense in carrying on a trade or business for purposes of the Internal Revenue Code of 1986 and shall not be deductible. A manufacturer of cigarettes may seek judicial review of any action under this section only after the assessment involved has been paid by the manufacturer to the Department of the Treasury and only in the United States District Court for the District of Columbia. Prior to the filing of an action by a manufacturer seeking judicial review of an action under this section, the manufacturer shall notify the Attorney General of such intent to file and the Attorney General shall have 30 days in which to respond to the action. The amount of any surcharge paid under this section shall be subject to judicial review by the United States Court of Appeals for the District of Columbia Circuit, based on the arbitrary and capricious standard of section 706 of title 5, United States Code. Notwithstanding any other provision of law, no court shall have the authority to stay any surcharge payment due to the Secretary under this section pending judicial review until the Secretary has made or failed to make a compliance determination, as described under this section, that has adversely affected the person seeking the review. There is hereby imposed an initial penalty on the failure of any manufacturer to make any payment required under this section not later than a period determined sufficient by the Secretary after the date on which such payment is due. The amount of the penalty imposed by paragraph

(1)on any failure with respect to a manufacturer shall be an amount equal to 2 percent of the penalty owed under subsection

(b)for each day during the noncompliance period. For purposes of this subsection, the term noncompliance period means, with respect to any failure to make the surcharge payment required under this section, the period— beginning on the due date for such payment; and ending on the date on which such payment is paid in full. No penalty shall be imposed by paragraph

(1)on— any failure to make a surcharge payment under this section during any period for which it is established to the satisfaction of the Secretary that none of the persons responsible for such failure knew or, exercising reasonable diligence, would have known, that such failure existed; or any manufacturer that produces less than 1 percent of cigarettes used by youth in that year (as determined by the annual survey).

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42 USC 300u–11

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Sec. 307

Incentives to reduce tobacco use

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